If you’ve ever posted a job ad or advertised on a public platform that you are hiring, you more than likely have been contacted by a staffing agency to help you fill your opening. Navigating the choice of to use a staffing agency and when to engage with them can be confusing; let us help.
How Does a Staffing Agency Work?
Staffing agencies have dedicated teams of recruiters that focus their recruiting capabilities on hiring employees for other companies. It takes a lot of time and effort to advertise for a job, sort through resumes, call and coordinate interviews, provide feedback and maintain whatever else it is you do on a daily basis. For this reason, the value of using a recruiter can save you upfront costs on job advertisement and countless soft dollars for the time and productivity lost while conducting the hiring process.
What Services are Provided?
Most staffing agencies have a common core of general service offerings in addition to more robust, complex services to aid your organization as you hit various growth milestones. We’ll outline both buckets.
Bucket 1: Common Core Service Offerings
- Direct Hire: Direct hire staffing is the permanent placement and headhunting service of recruitment in which the agency recruiter recruits for your open position and on the first day of employment, the employee belongs to you, being the employer of record. These searches can be contingent, meaning you only pay a fee if the recruiter identifies someone you want to hire and they start or retained in which you pay a portion of the fee upfront to guarantee the recruiter works diligently on your opening. The fees charged are typically a percentage of the employee’s first-year annual salary.
Temporary Staffing: Temporary or temp staffing is a service provided in which the agency recruiter recruits candidates for your job opening and you hire the employee as a temporary employee through the staffing agency as the employer of record. This is often used for seasonal or project-based work. Temp positions can be as short as a few days and last as long as several years depending on the scope. Agency fees for temporary staffing are typically charged at an hourly markup.
Temp to Hire Staffing: Temp to hire staffing follows the same principles of temporary staffing but in this case, the employee can be hired on at the end of a temp duration for full-time positions. Many employers choose to hire this route as a safe way to “try before you buy” your employees. The agency fees are also typically charged at an hourly markup.
Payroll Services: Staffing agency payroll services are much different than a PEO’s offering in that the staffing agency is the employer of record and the employee works under your supervision. Payroll services are used to employ a candidate you have identified yourself as an organization and do not want to have on your internal payroll. This service is typically used similarly for a “try before you buy” for internally identified candidates, or for project work where the position will not remain permanent. Many large organizations take advantage of this service to defer risk, ensure compliance, make paying employees easier, and manage their temporary workforce. The agency fees for payroll services are also an hourly markup, and significantly cheaper than a temp or temp to hire markup.
2020 HR Services Pricing Guide
This guide is full of straightforward independent information to help you get the right service and price for your company.
Bucket 2: Advanced Staffing Agency Services
- Managed Service Provider (MSP): A managed service provider is a third party that manages all of your staffing agencies. If you have over 50 temporary employees and use multiple agencies to fill temp openings, you could likely use an MSP. The third-party will manage the entire recruitment lifecycle, vendor, and contingent worker relationships and funnel all communication through one point of contact. An MSP is also often referred to as a Vendor Management System (VMS), which is the technology platform the recruitment activity happens on. The benefits of an MSP to an organization are extensive, including increased optics to the contingent workforce, standardized vendor rates, terms and contracts, consolidated invoicing, subject-matter expert program managers to ensure success and best practices, decreased turnover, time to hire, and many more.
- 1099/Independent Contractor Compliance and SOW Management: Independent contractor management can be a difficult task to manage internally if you utilized a large number of ICs and have multiple locations you conduct business. IC laws vary state by state and are heavily regulated to ensure proper taxation and employment relations are followed. Improperly classified IC workers can result in penalty fees in excess of $250,000 including unforeseen lawsuits. Using an agency that has a specialized 1099 compliance team will help you ensure your workers are properly classified, set up correctly, and defer risk to avoid business crippling fees.
- Recruitment Process Outsourced (RPO): An RPO is designed to help organizations that are hiring in high volume reach their hiring goals at a cost-effective rate. A staffing firm that offers RPO services will have a dedicated team of recruiters that specialize in recruiting the specific job types you are seeking to fill and do so at a flat monthly rate or per-hire fee that is more cost-efficient than a standard direct hire fee. These programs are customized to your business needs and fee structures may vary.
Whether it is your first time using a staffing agency or you’re looking for a better performer, the services staffing agencies provide you can save you countless time, energy and money. Choose your vendors wisely and don’t take the first call you get (you will get plenty). Look for an agency that’s up to date with best practices and has a vested interest in seeing your business thrive. A good HR partner will be transparent and ask for details beyond what you provide them. A trusted staffing agency is a powerful resource to keep in your business contacts and offer insightful HR help beyond their traditional services.
About The Author
Tyler Cook, Talent Solutions at Suna Solutions
Tyler Cook specializes in developing plans to provide top talent while streamlining the hiring process with industry-leading best practices. He has worked at Suna Solutions for the past 4 years building lasting relationships with organizations in order to provide comprehensive cost reduction strategies, employer branding, best talent acquisition strategies, and other customized solutions tailored to fuel a company’s success. Connect with him at email@example.com or on LinkedIn